FIRST DIVISION

[G.R. No. 134030. April 25, 2006.]

ASAPHIL CONSTRUCTION AND DEVELOPMENT CORPORATION,

petitioner , vs. VICENTE TUASON, JR., INDUPLEX, INC. and MINES
ADJUDICATION BOARD, respondents.

DECISION

AUSTRIA-MARTINEZ, J : p

The present petition for review under Rule 45 of the Rules of Court assails the
Decision of the Mines Adjudication Board (MAB) dated August 18, 1997, modifying the
Decision dated December 11, 1991 of the Regional Executive Director, DENR-Region V,
Legaspi City. The dispositive portion of the MAB Decision reads:

WHEREFORE, the Decision dated December 11, 1991 of the Regional

Executive Director is hereby MODIFIED. The Agreement to Operate Mining
Claim, dated May 29, 1976 is hereby CANCELLED and/or REVOKED and the
appeal in so far as the Contract to Sell and Purchase Perlite Ore, dated March 24,
1975 is hereby DISMISSED for lack of merit.

SO ORDERED. 1

On March 24, 1975, respondent Vicente Tuason, Jr. 2 (Tuason) entered into a
Contract for Sale and Purchase of Perlite Ore with Induplex, Inc. (Induplex), wherein
Induplex agreed to buy all the perlite ore that may be found and mined in Tuason's mining
claim located in Taysa, Daraga, Albay. In exchange, Induplex will assist Tuason in securing
and perfecting his right over the mining claim. 3

Thereafter, Tuason executed on May 29, 1976, an Agreement to Operate Mining

Claims in favor of petitioner Asaphil Construction and Development Corporation (Asaphil). 4

On November 9, 1990, Tuason filed with the Bureau of Mines, Department of

Environment and Natural Resources (DENR), a complaint against Asaphil and Induplex for
declaration of nullity of the two contracts, namely, the Contract for Sale and Purchase of
Perlite Ore, and the Agreement to Operate Mining Claims. Tuason alleged in his complaint
that the stockholders of Induplex formed and organized Ibalon Mineral Resources, Inc.
(Ibalon), an entity whose purpose is to mine any and all kinds of minerals, and has in fact
been mining, extracting and utilizing the perlite ore in Ibalon's mining claim; that this is in
violation of the condition imposed by the Board of Investments (BOI) on Induplex in its Joint
Venture Agreement with Grefco, Inc. dated September 3, 1974, prohibiting Induplex from
mining perlite ore, through an operating agreement or any other method; that Induplex
acquired the majority stocks of Asaphil on January 14, 1989, and that 95% of Ibalon's
shares were also transferred to Virgilio R. Romero, who is a stockholder of Induplex,
Asaphil and Ibalon. Tuason claimed that said acts adversely affected, not only his interest
as claimowner, but the government's interest as well. 5

Asaphil filed its Answer, praying for the dismissal of the complaint on the ground that
the DENR has no jurisdiction over the case. 6

Induplex filed a Motion to Dismiss the complaint, also on ground of lack of

jurisdiction. Induplex contended that to fall within the jurisdiction of the DENR, the
controversy should involve a mining property and the contending parties must be
claimholders and/or mining operators; and that the dispute in this case involves "mineral
product" and not a mining property, and the protagonists are claimholders (Tuason) and a
buyer (Induplex). 7

The DENR, through the Regional Executive Director, found merit in Induplex's
arguments and dismissed the complaint. The dispositive portion of the Regional Executive
Director's Decision reads:

WHEREFORE, in view of the foregoing, the instant complaint should be,

as it is hereby dismissed.
EHTIc D

SO ORDERED. 8

On appeal, the MAB rendered the herein assailed Decision dated August 18, 1997.
The MAB ruled that the complaint is for the cancellation and revocation of the Agreement to
Operate Mining Claims, which is within the jurisdiction of the DENR under Section 7 of
Presidential Decree No. 1281. The MAB also found that the acquisition by Induplex of the
majority stocks of Asaphil, and Induplex's assumption of the mining operation violated the
BOI prohibition. With regard, however, to the validity of the Contract for Sale and Purchase
of Perlite Ore, the MAB ruled that the evidence does not support Tuason's plea for its
cancellation. 9

Asaphil and Induplex filed a motion for reconsideration which was denied by the MAB
per Order dated March 23, 1998. 10

Hence, the herein petition by Asaphil on the following grounds:

A. THE BOARD A QUO HAS DECIDED A QUESTION OF SUBSTANCE

UNDER THE RECENTLY ENACTED MINING ACT OF 1995 (R.A. NO.
7942), NOT THERETOFORE DETERMINED BY THIS HONORABLE
TRIBUNAL —

• BY VIOLATING ARTICLE 1930 OF THE CIVIL CODE OF THE

PHILIPPINES WHEN IT CANCELLED ASAPHIL'S AGENCY
(COUPLED WITH AN INTEREST) UNDER THE OPERATING
AGREEMENT.

• BY VIOLATING ASAPHIL'S CONSTITUTIONAL RIGHT TO DUE

PROCESS OF LAW WHEN THE BOARD ADJUDICATED UPON
ALLEGED VIOLATION OF THE AGREEMENT ON THE PART OF
ASAPHIL, BUT WITHOUT RECEIVING EVIDENCE OF ANY
SUCH VIOLATION.
 • BY IGNORING ASAPHIL'S 52.5% INTEREST UNDER THE
OPERATING AGREEMENT WHICH GIVES TO ASAPHIL THE
RIGHT TO DETERMINE WHETHER OR NOT THE OPERATING
AGREEMENT MUST BE CANCELLED.

• BY INVALIDATING THE OPERATING AGREEMENT WITHOUT

RECEIVING EVIDENCE ON THE PURPORTED GROUND FOR
INVALIDATION.

• BY NOT ADJUDICATING UPON THE RIGHTS AND OBLIGATION

OF TUASON AND ASAPHIL UNDER THE OPERATING
AGREEMENT WHICH IS ACTUALLY IN THE NATURE OF A
JOINT VENTURE AGREEMENT, BY REASON OF THE
FINANCIAL RAMIFICATIONS THEREOF.ITSaHC

B. THE BOARD A QUO HAS DEPARTED FROM THE ACCEPTED AND

USUAL COURSE OF JUDICIAL PROCEEDINGS —

1. BY INVALIDATING THE OPERATING AGREEMENT WITHOUT

RECEIVING EVIDENCE ON THE PURPORTED GROUND FOR
INVALIDATION.

2. THE ACTUATION OF THE MINES ADJUDICATION BOARD IS

UNCONSTITUTIONAL, AS IT DEPRIVES THE PETITIONER OF
ITS RIGHT TO PRESENT EVIDENCE ON THE ISSUE OF
WHETHER OR NOT THE OPERATING AGREEMENT HAS BEEN
VIOLATED, VIRTUALLLY DEPRIVING THE PETITIONER OF ITS
PROPRIETARY RIGHTS WITHOUT DUE PROCESS OF LAW.

3. THE MINES ADJUDICATION BOARD ERRED IN

ENTERTAINING TUASON'S APPEAL FROM THE ORDER OF
DISMISSAL, AS THE LATTER WAS CONCERNED SOLELY
WITH THE ISSUE OF JURISDICTION WHICH, BEING A
MATTER OF LAW, IS COGNIZABLE BY THIS HONORABLE
TRIBUNAL AND/OR BY THE COURT OF APPEALS.

4. GRANTING THAT THE MINES ADJUDICATION BOARD COULD

VALIDLY ASSUME THE FACTS (WITHOUT RECEIVING
EVIDENCE),

a) THE MINES ADJUDICATION BOARD NONETHELESS

ERRED IN ANNULLING THE OPERATING AGREEMENT
BETWEEN TUASON AND ASAPHIL, ON THE MERE
CIRCUMSTANCE THAT A STOCKHOLDER OF
INDUPLEX HAD BECOME A STOCKHOLDER OF
ASAPHIL IN 1990.
ATEHDc

b) THE MINES ADJUDICATION BOARD LIKEWISE ERRED

IN ANNULING THE OPERATING AGREEMENT BETWEEN
TUASON AND ASAPHIL ON THE BASIS OF THE
ASAPAHIL'S PURPORTED VIOLATION OF THE TERMS
OF THE OPERATING AGREEMENT.
 5. THE MINES ADJUDICATION BOARD FURTHER ERRED IN
ANNULING THE OPERATING AGREEMENT BETWEEN
TUASON AND ASAPHIL AND AT THE SAME TIME THE BOARD
UPHELD THE VALIDITY OF THE SUPPLY CONTRACT
BETWEEN TUASON AND INDUPLEX BASED ON THE SAME
INVALIDATING CAUSE. 11 (Emphasis supplied)

Petitioner's arguments may be summed up into two basic issues: first, whether or
not the DENR has jurisdiction over Tuason's complaint for the annulment of the Contract for
Sale and Purchase of Perlite Ore between Tuason and Induplex, and the Agreement to
Operate Mining Claims between Tuason and Asaphil; and second, whether or not the MAB
erred in invalidating the Agreement to Operate Mining Claims.

As a preliminary matter, it should be stated that MAB decisions are appealable to the
Court of Appeals (CA) under Rule 43 of the Rules of Court. In Carpio v. Sulu Resources
Development Corp., 12 the Court clarified that while Section 79 of the Philippine Mining Act
of 1995 provides that petitions for review of MAB decisions are to be brought directly to the
Supreme Court, the MAB is a quasi-judicial agency whose decisions should be brought to
the CA. However, considering that the Carpio case was rendered in 2002, and the petition
before the Court was filed in 1999; and considering further that the issues raised, specially
the issue of the DENR's jurisdiction, and the fact that the records of the case are already
before the Court, it is more appropriate and practical to resolve the petition in order to avoid
further delay. 13

With regard to the issue of jurisdiction, the DENR Regional Executive Director
opined that the DENR does not have jurisdiction over the case, while the MAB ruled that
the DENR has jurisdiction.

The Court upholds the finding of the DENR Regional Executive Director that the
DENR does not have jurisdiction over Tuason's complaint. ETIHCa

At the time of the filing of the complaint, the jurisdiction of the DENR over mining
disputes and controversies is governed by P.D. No. 1281, entitled "Revising
Commonwealth Act No. 136, Creating the Bureau of Mines, and for Other Purposes." 14
Particularly, P.D. No. 1281 vests the Bureau of Mines (now the Mines and Geo-Sciences
Bureau) of the DENR with jurisdictional supervision and control over all holders of mining
claims or applicants for and/or grantees of mining licenses, permits, leases and/or
operators thereof, including mining service contracts and service contractors insofar as
their mining activities are concerned. 15 Under Section 7 of P.D. No. 1281, the Bureau of
Mines also has quasi-judicial powers over cases involving the following:

(a) a mining property subject of different agreements entered into by

the claim holder thereof with several mining operators;

(b) complaints from claimowners that the mining property subject of an

operating agreement has not been placed into actual operations within the period
stipulated therein; and

(c) cancellation and/or enforcement of mining contracts due to the

refusal of the claimowner/operator to abide by the terms and conditions thereof.
 In Pearson v. Intermediate Appellate Court , 16 this Court observed that the trend has
been to make the adjudication of mining cases a purely administrative matter, although it
does not mean that administrative bodies have complete rein over mining disputes. In
several cases on mining disputes, the Court recognized a distinction between (1) the
primary powers granted by pertinent provisions of law to the then Secretary of Agriculture
and Natural Resources (and the bureau directors) of an executive or administrative nature,
such as granting of license, permits, lease and contracts, or approving, rejecting,
reinstating or canceling applications, or deciding conflicting applications, and (2)
controversies or disagreements of civil or contractual nature between litigants which are
questions of a judicial nature that may be adjudicated only by the courts of justice. 17

The allegations in Tuason's complaint do not make out a case for a mining dispute or
controversy within the jurisdiction of the DENR. While the Agreement to Operate Mining
Claims is a mining contract, the ground upon which the contract is sought to be annulled is
not due to Asaphil's refusal to abide by the terms and conditions of the agreement, but due
to Induplex's alleged violation of the condition imposed by the BOI in its Joint Venture
Agreement with Grefco, Inc.. Also, Tuason sought the nullity of the Contract for Sale and
Purchase of Perlite Ore, based on the same alleged violation. Obviously, this raises a
judicial question, which is proper for determination by the regular courts. 18 A judicial
question is raised when the determination of the question involves the exercise of a judicial
function; that is, the question involves the determination of what the law is and what the
legal rights of the parties are with respect to the matter in controversy. 19

The DENR is not called upon to exercise its technical knowledge or expertise over
any mining operations or dispute; rather, it is being asked to determine the validity of the
agreements based on circumstances beyond the respective rights of the parties under the
two contracts. In Gonzales v. Climax Mining Ltd., 20 the Court ruled that:

. . . whether the case involves void or voidable contracts is still a judicial

question. It may, in some instances, involve questions of fact especially with
regard to the determination of the circumstances of the execution of the contracts.
But the resolution of the validity or voidness of the contracts remains a
legal or judicial question as it requires the exercise of judicial function. It
requires the ascertainment of what laws are applicable to the dispute, the
interpretation and application of those laws, and the rendering of a judgment
based thereon. Clearly, the dispute is not a mining conflict. It is essentially
judicial. The complaint was not merely for the determination of rights under
the mining contracts since the very validity of those contracts is put in
issue. (Emphasis supplied)

Thus, the DENR Regional Executive Director was correct in dismissing the
complaint for lack of jurisdiction over Tuason's complaint; consequently, the MAB
committed an error in taking cognizance of the appeal, and in ruling upon the validity of the
contracts.

Given the DENR's lack of jurisdiction to take cognizance of Tuason's complaint, the
Court finds it unnecessary to rule on the issue of validity of the contracts, as this should
have been brought before and resolved by the regular trial courts, to begin with.
 WHEREFORE, the petition is GRANTED. The Decision of the Mines Adjudication
Board dated August 18, 1997 is SET ASIDE, and the Decision dated December 11, 1991 of
the Regional Executive Director, DENR-Region V, Legaspi City, dismissing the complaint
for lack of jurisdiction, is REINSTATED.

Costs against respondent. Ac TDaH

SO ORDERED.

Panganiban, C.J., Ynares-Santiago, Callejo, Sr. and Chico-Nazario, JJ., concur.

Footnotes

1. Rollo, p. 35.

2. Now deceased, and succeeded in this case by John Lyndon H. Tuason.

3. Rollo, p. 94, et seq .

4. Id. at 90-93.

5. Id. at 86-88.

6. Id. at 102-104.

7. Id. at 105-108.

8. Id. at 115.

9. Id. at 29-35.

10. Id. at 81-85.

11. Rollo, pp. 17-19.

12. 435 Phil. 836, 842 (2002).

13. PAGCOR v. Angara, G.R. NO. 142937, November 15, 2005.

14. P.D. 1281 took effect on January 16, 1978.

15. Benguet Corporation v. Leviste , G.R. No. 65021, November 21, 1991, 204 SCRA 99,
103-104.

16. 356 Phil. 341, 358 (1998).

17. Gonzales v. Climax Mining, Ltd ., G.R. No. 161957, February 28, 2005, 452 SCRA 607,
620-621.

18. Id. at 620.

19. Id.
20. Supra note 17, at 623.